Bank of England holds rates at 3.75%, plans £146bn gilt sales to Treasury

The Bank of England announced on 17 September 2026 a significant modification to its quantitative tightening strategy, disclosing plans to sell £146bn in gilts back to the Treasury. The announcement coincided with the Monetary Policy Committee's decision to hold interest rates at 3.75%. The Guardian Business reported the shift carries implications for UK public finances and monetary policy implementation.

In a directly connected development, the Bank of England's Executive announced a pause to Asset Purchase Facility (APF) gilt auctions pending a review of the model governing sales of gilts held for monetary policy purposes, as reported by the BOE. This pause represents a structural change to how the Bank manages the unwinding of its asset holdings accumulated during prior quantitative easing operations.

UK gilts are directly affected by this announcement, as the volume and mechanism of government bond sales from the APF determines supply conditions in the gilt market. Sterling against the US dollar (GBPUSD) is connected as a key indicator of UK monetary policy expectations, with the rate hold and QT modification both bearing on the currency's domestic policy backdrop.

Bloomberg Markets reported, citing Barclays strategists, that the reduced pace of quantitative tightening bond sales is associated with eased pressure on repo operations and provided support for long-dated gilt yields. The BOE's review of its gilt sales model remains ongoing as of the dates reported.

Sources: Guardian Business, BOE, Bloomberg Markets